He Really Did Jump!

This is what my brother reportedly said right after I left the airplane on the paragliding course. The UK referendum was a similar surprise. It could have been expected, nevertheless I did not expect it. Supposedly, you cannot even slow down when riding the integration bicycle. You have to keep pedalling faster and faster. And the UK has just dismounted it.

I do not know what will happen. Nobody knows. Nobody can know. It is a big change connected to an endless quantity of unpredictable scenarios. Despite that, many rise fears, others even shout fictional GDP moves left and right. Modern astrology sanctified by PhD degrees from prestigious universities that help to validate this or that campaign. Do we have to fear a recession? Yes, recession is possible in the near future. However, FED was aware of global economic slowdown already before the results of the referendum.

Things can really go wrong. In the campaign for exit nationalistic, xenophobic and isolationist arguments resonated. If the very person who picks up the power lying on the ground will continue to play on the strings of protectionism, the door not only in front of Polish plumber, but also in front of freedom and growth in Europe can also be slammed. However, the situation can also develop well.

Europe is going in the wrong direction. It stagnates and does not catch up with the changing world. It protects itself against reforms by abuse of the Central Bank, it is overgrown by debt, banks are collapsing and EU suffers with high unemployment rate. Brexit and the shock it evokes is a chance to change the path for the old continent not to become an outdoor museum for Chinese tourists. UK can stay in European Economic Area like Norway or it can do everything on its own just like Switzerland. Some say Norwegian model is wrong and Brits will win nothing because the country has to keep paying to the EU budget and it also needs to follow EU directives which it can neither affect nor change. Nonetheless, Norwegians think otherwise and 70% of them voted to stay outside of the EU.

Swiss path is allegedly even worse than the continuance in the EU. Yet, Swiss apply directives selectively and they pay the EU considerably less. In doing so, they exported 4.5 times more goods per capita than the British to the EU internal market. And they have a free trade agreement with China. Unlike the EU.

Brexit is not the cause of radicalization of the population, but its manifestation. Euroscepticism is Europe-wide. Who would dare to organise a vote to change the Lisbon Agreement or organise an exit referendum in France? There are many reasons for the anger of voters – failure of the basic functions of national states and the reason for existence of the EU are happening live. Coordination of foreign policy, border protection and the policies for the most vulnerable parts of society? In the 21st century, hundreds of thousands of people walk on foot through the most developed continent. Public officers make their journey harder and volunteers save them from the cold, hunger and thirst. Migrants pay smugglers thousands of dollars and risk their lives, despite the fact that the entire continent can be crossed the dry, warm and safe for one hundred euros. If only the politicians would not fail and there were rules who is IN and who is OUT.

On the other hand, the policymakers managed by lobbyists are great in regulating the vacuum cleaner power inputs. Some of them, despite the immigration crisis, Ukraine’s foreign policy or diplomatic failure in Syria argue that socialist bureaucracy in Brussels has to be saved at all costs, otherwise we will be devoured by Russia. If this is true, we have been doomed already for quite some time.

Cameron resigned after Brexit. Symptomatic of the ability to reflect the reality and of the detachment of Brussels from the rest of the Union is that Juncker will need to be carried out feet first. As one of the main creators of the euro and thus of the euro crisis, rather than becoming the president of the European Commission, he should have become, at best, the secretary for the local club of friends of good wine.

European leaders (even after the failure of their own performances and facing the exit of an important member of the group) are sending outraged and offended speeches back to the sixth largest economy in the world and causing harm to all of us. Therefore, I have little confidence about the after-brexit reforms. Rather, I believe in the gradual loss of influence of Brussels and a return of the anarchy of European countries and their mutual coordination by international treaties. This trend had already started before Brexit, when the malfunction of the EU model was revealed through the euro crisis. The Fiscal Compact is not an agreement within the framework of the Lisbon Treaty, it is a non-EU intergovernmental agreement that not all members have accepted. It is not necessarily bad news. In Europe, it is about time to stop with the “We must all agree, and the one who does not agree is against us”.

Neighbours cannot live peacefully next to each other for a long time this way. Everyone has a right to their own mistakes. Competition in the area of solving public problems in Europe is the way to innovation, prosperity and insurance against stupidity and mistakes of politicians and bureaucrats.

Juraj Karpiš is co-founder and member of INESS. He completed the Faculty of Management at Comenius University in Bratislava with focus on financial management. Before his work at INESS he was employed in various commercial financial institutions in Slovakia and abroad. He focuses on monetary policy, public finance and healthcare system.

INESS, the Institute of Economic and Social Studies, began its activities in January 2006. As an independent think tank, INESS monitors the functioning and financing of the public sector, evaluates the effects of legislative changes on the economy and society and comments on current economic and social issues.